Correlation Between Elkem ASA and Hexagon Purus
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Hexagon Purus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Elkem ASA and Hexagon Purus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Hexagon Purus As, you can compare the effects of market volatilities on Elkem ASA and Hexagon Purus and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Elkem ASA with a short position of Hexagon Purus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Hexagon Purus.
Diversification Opportunities for Elkem ASA and Hexagon Purus
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elkem and Hexagon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Hexagon Purus As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Purus As and Elkem ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Elkem ASA are associated (or correlated) with Hexagon Purus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Purus As has no effect on the direction of Elkem ASA i.e., Elkem ASA and Hexagon Purus go up and down completely randomly.
Pair Corralation between Elkem ASA and Hexagon Purus
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.5 times more return on investment than Hexagon Purus. However, Elkem ASA is 2.02 times less risky than Hexagon Purus. It trades about -0.03 of its potential returns per unit of risk. Hexagon Purus As is currently generating about -0.05 per unit of risk. If you would invest 2,876 in Elkem ASA on August 30, 2024 and sell it today you would lose (1,052) from holding Elkem ASA or give up 36.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Hexagon Purus As
Performance |
| Timeline |
| Elkem ASA |
| Hexagon Purus As |
Elkem ASA and Hexagon Purus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Hexagon Purus
The main advantage of trading using opposite Elkem ASA and Hexagon Purus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Hexagon Purus can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hexagon Purus will offset losses from the drop in Hexagon Purus' long position.| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
| Hexagon Purus vs. Clean Seas Seafood | Hexagon Purus vs. Xplora Technologies As | Hexagon Purus vs. Arcticzymes Technologies ASA | Hexagon Purus vs. 5Th Planet Games |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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